You might hear the term High Net Worth Individual (or even just its initials, HNWI) bandied about, but just how do you define what it takes to qualify for that definition, and for bespoke high net worth insurance policies?
The answer is that no absolute standard exists – although various sources take a stab at defining the limits. High Net World Magazine, for example, has suggested that you need to be worth at least $1 million (the approximate equivalent of some £650,000) to fall into this category, more than $5 million to be defined as a very High Net Worth Individual and by the time your wealth exceeds $50 million you are called an Ultra-High Net Worth Individual and all further definitions are off the scale.
International property agents Knight Frank recently pointed out that in 2016, the number of Ultra-High Net Worth Individuals is more than 187,000, up some 61% over 2005’s figure of fewer than 117,000.
Fascinating as all this may be, here at GSI Insurance, we are not so hide-bound by definitions and – just as we suggest in our detailed Guide to High Net Worth Insurance – take the view that these are people who are simply very wealthy.
Who needs high net worth insurance?
In our book, therefore, you are likely to need high net worth insurance if you have something unusual or extremely valuable. The more you stand to lose, the greater your need for high net worth insurance.
Although the population of the very wealthy may be growing in numbers, arranging insurance for such individuals is clearly a specialist subject and one that needs to ensure that policies are carefully tailored to match the particular, individual needs of each and every client. In this area of insurance as in no other, there are no one size fits all solutions.
What is this specialist insurance likely to cover?
With that essential consideration in mind, however, there are a number of possessions for which the High Net Worth Individual needs the protection of insurance cover:
- a considerable amount of equity is likely to be owned in the individual’s own home and other residential properties which may be used from time to time;
- considerable wealth may be generated through judicious investment in property;
- property investment is an essentially business operation, of course, and so insurance cover for this type of property – whether residential or commercial – must reflect a business use, for which standard home insurance policies are inadequate and inappropriate;
Classic, prestige and high performance cars
- these vehicles are invariably extremely valuable possessions;
- the legal requirement for a minimum of third party insurance for any of those vehicles is likely to take very much a back seat to the importance of safeguarding them against theft, fire, loss or damage;
Works of art
- another HNW need may be insurance for a collection of valuable works of art, collectables and other high value items;
- each collection is almost certain to be unique and this is reflected in the specialist form of high net worth insurance which needs to be arranged.
These are just a few of the examples illustrating the important and specialist nature of high net worth insurance.